The annual gift tax exclusion lets you give up to $18,000 per person per year without filing paperwork or reducing your lifetime exemption

The annual exclusion is the amount you can give to any one person in a calendar year without triggering gift tax reporting. For 2024, that amount is $18,000 per recipient. You can give $18,000 to your child, $18,000 to your spouse, $18,000 to a friend, and $18,000 to another friend — all in the same year — and none of it counts against your lifetime exemption or requires you to file a gift tax return.

The exclusion amount changes most years. It is tied to inflation and rounds to the nearest $1,000. The IRS announced the 2024 figure in October 2023. If you are giving money in 2025 or later, check the IRS website for that year's exclusion, because it will likely be higher.

Married couples can combine their exclusions. If you and your spouse both give to the same person, you can give $36,000 total ($18,000 each) without any filing requirement. This is called gift splitting, and it requires both spouses to agree — you do not need the recipient's permission.

Key Takeaways

  • You can give $18,000 per person per year (2024 amount) without filing a gift tax return or owing tax.
  • The exclusion resets on January 1 each year, so you can give $18,000 in December and another $18,000 in January to the same person.
  • Married couples can each give $18,000 to the same recipient, totaling $36,000 with no paperwork.
  • Gifts above the annual exclusion do not immediately trigger tax; they reduce your lifetime exemption instead.
  • Certain gifts — to spouses, to charity, and for medical or education expenses paid directly to providers — are never taxed regardless of amount.

What happens if you give more than $18,000 to one person

If you give $25,000 to your daughter in one year, the first $18,000 is covered by the annual exclusion. The remaining $7,000 is not immediately taxed, but it does use up $7,000 of your lifetime exemption. The lifetime exemption for 2024 is $13.61 million. Most people never reach it.

When you exceed the annual exclusion, you must file Form 709 (the gift tax return) with the IRS, even though you owe no tax. This form tells the IRS you are using part of your lifetime exemption. If you do not file when required, you lose the ability to use that exemption amount later, and the IRS may assess penalties.

The lifetime exemption is shared between gifts during your life and your estate after you die. If you use $100,000 of it now through large gifts, your heirs will have $100,000 less to shelter from estate tax when you pass. For most households, this is not a practical concern because the exemption is so large. But for very wealthy families, it matters.

Gifts that are never taxed, no matter the amount

Some gifts fall outside the tax system entirely. Gifts to your spouse are unlimited and never taxed, as long as your spouse is a U.S. citizen. Gifts to registered charities are also unlimited and tax-free. These do not use your annual exclusion or your lifetime exemption.

Payments made directly to a medical provider or school on someone else's behalf are not treated as gifts at all. If you pay your grandchild's tuition directly to the university, or pay a hospital bill directly to the hospital, those payments do not count toward the annual exclusion — no matter how large. The key is that you pay the provider directly, not the person receiving the care.

Gifts between spouses who are both U.S. citizens are unlimited. If you give your spouse $500,000, there is no tax, no filing requirement, and no impact on your exemption. This changes if your spouse is not a U.S. citizen; the annual exclusion for non-citizen spouses is much lower ($18,000 in 2024, same as anyone else).

How the calendar year works for the annual exclusion

The exclusion resets on January 1 each year. A gift you make on December 31 and a gift you make on January 1 are in different tax years, even though they are one day apart. This means you can give $18,000 in late December and another $18,000 in early January to the same person, and both are covered by the annual exclusion.

The date that matters is when the gift is complete — when the recipient has full control of the money or property. For a check, that is usually the date you give it to them, not the date they cash it. For a bank transfer, it is the date the money leaves your account. For property, it is the date you transfer the title or deed.

Reporting gifts to the IRS

If all your gifts to all recipients in a year stay within the annual exclusion, you do not file anything. No form, no letter, no contact with the IRS. The exclusion is automatic.

If you give more than $18,000 to any one person in a year, you must file Form 709 with your tax return for that year, even if you owe no tax. File it by April 15 (or your tax filing deadline if you get an extension). The form lists each gift over the exclusion and tells the IRS you are using your lifetime exemption.

If you are married and using gift splitting, both spouses must file Form 709, even if only one of you made the gift. The form documents that you both agreed to split the gift.

State gift taxes and other rules

The federal gift tax is the only gift tax most people encounter. A few states — Connecticut, Delaware, Illinois, Louisiana, Minnesota, Mississippi, Nevada, North Carolina, Oregon, Rhode Island, Tennessee, and Washington — have their own gift or estate taxes, but most do not. If you live in one of these states, check your state's rules, because the exemption amounts and rules may differ from federal law.

Some states tax gifts made during life; others tax only what you leave in your estate. Some have lower exemptions than the federal government. A state tax does not replace the federal tax — you may owe both.

Frequently Asked Questions

Can I give cash gifts without the IRS knowing?

The IRS does not monitor individual cash gifts under the annual exclusion. You do not report them. However, if you give more than $18,000 to one person in a year, you must file Form 709. Banks also report large cash transactions (over $10,000) to the IRS, though this is separate from gift tax and does not by itself trigger tax.

Does a gift to my child reduce their inheritance?

Not automatically. A gift during your life is separate from your will or estate plan. If you give your child $20,000 now, that does not reduce what they inherit later unless your will specifically says so. You can give gifts and still leave your full estate to your children.

What if I give someone money and they pay me back later?

If the repayment is a genuine loan with a written agreement and interest, it is not a gift. If there is no agreement and no expectation of repayment, the IRS may treat it as a gift. To be safe, use a promissory note that states the loan amount, interest rate, and repayment schedule.

Can I give my adult child money for a down payment on a house?

Yes. A gift for a down payment is treated like any other gift. You can give up to $18,000 per year without filing. If you give more, file Form 709. The lender may ask for a gift letter stating the money is a gift and not a loan, but this does not change the tax treatment.

Do I owe tax if someone gives money to me?

No. The person giving the gift pays any tax, not the recipient. You can receive unlimited gifts with no tax consequence. The giver must track whether they stayed within the annual exclusion.